yes that's what makes this situation so interesting. Feels a bit like a spring ready to burst one way or the other...but even if it did move so many people are split in opinion that they can't let it.

That's to say, that the difference in ammo is close to zero.

I would say the ammo is on the buying side. After the big sell-off that brought us down to the $4 trading range there are a lot of people sitting on cash waiting to get in. The only ones who knows just how many coins are stored on the site for quick sale are gox staff.

yes that's what makes this situation so interesting. Feels a bit like a spring ready to burst one way or the other...but even if it did move so many people are split in opinion that they can't let it.

That's to say, that the difference in ammo is close to zero.

I would say the ammo is on the buying side. After the big sell-off that brought us down to the $4 trading range there are a lot of people sitting on cash waiting to get in. The only ones who knows just how many coins are stored on the site for quick sale are gox staff.

Yeah you're right about tons of people selling = tons of people cashed up...but I suppose using up your ammo by selling doesn't make you join the other side. You can wait for your teammates to use their ammo and overcome what's left of the enemy....but that's exactly what's not happening. No one has any ammo left for the team they want to be on...so everyone's just staring at each other and checking their pockets.

Let's assume for the moment that nobody uses Bitcoins to buy or sell anything other than dollars. There's no bitcoin economy to speak of; it's all exchanges.

In the past thirty days, judging by the volume and a conservative fee schedule, Mt. Gox has absorbed 69k$ in exchange fees. Now, let's assume these folks are incredibly reckless, and every month they blow 10% of their money on exchange fees. This would mean that they have at least 690k$ that they're playing around with in the market. And here's the thing: I'm pretty sure that number would be the same whether we're trading at 5$ or 5c. It's the amount of USD they have to experiment with Bitcoin. That's inelastic - what's elastic is the number of BTC to which that amount translates.

Now, there are about 8.5 million Bitcoins in existence right now. As everyone knows, a lot of that money is hidden or lost and hasn't moved in months. But let's assume that they're all actually in circulation, all theoretically available to buy.

If that optimistic assumption about the BTC in circulation is true, along with all those incredibly pessimistic assumptions about the value being traded in BTC? Even then, we have a price of 690000/8500000 = eight cents per bitcoin. And if you add in all the other exchanges, plus all the other currencies, plus the BTC that's out of circulation, plus the commerce that's going on in BTC today, plus the fact that most people won't be blowing 10% of their profits on exchange fees... that price has nowhere to go but up.

So five cents isn't a rational price. In fact, it's a darn near impossible price.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.

Let's assume for the moment that nobody uses Bitcoins to buy or sell anything other than dollars. There's no bitcoin economy to speak of; it's all exchanges.

In the past thirty days, judging by the volume and a conservative fee schedule, Mt. Gox has absorbed 69k$ in exchange fees. Now, let's assume these folks are incredibly reckless, and every month they blow 10% of their money on exchange fees. This would mean that they have at least 690k$ that they're playing around with in the market. And here's the thing: I'm pretty sure that number would be the same whether we're trading at 5$ or 5c. It's the amount of USD they have to experiment with Bitcoin. That's inelastic - what's elastic is the number of BTC to which that amount translates.

Now, there are about 8.5 million Bitcoins in existence right now. As everyone knows, a lot of that money is hidden or lost and hasn't moved in months. But let's assume that they're all actually in circulation, all theoretically available to buy.

If that optimistic assumption about the BTC in circulation is true, along with all those incredibly pessimistic assumptions about the value being traded in BTC? Even then, we have a price of 690000/8500000 = eight cents per bitcoin. And if you add in all the other exchanges, plus all the other currencies, plus the BTC that's out of circulation, plus the commerce that's going on in BTC today, plus the fact that most people won't be blowing 10% of their profits on exchange fees... that price has nowhere to go but up.

So five cents isn't a rational price. In fact, it's a darn near impossible price.